Lecture 1 – Business Organization Basics

Course Objectives
 To introduce basic knowledge and concepts in business applicable to the work of young
engineers and scientists, and to help you become a better technology/engineering
manager or entrepreneur
 ILOs
1. Understand the role of business and innovation in the economy
2. Understand the work of a manager in a technology enterprise
3. Understand the work of the marketer as value creator
4. Understand the basic principles of accounting and performance measurement for
businesses
5. Understand profitability from principles of economics and finance
 After this course, electronic engineering students will better understand the applicability
of the skills that they are learning and the different career options available to them.

Fall 2024 A.K. Wong 2

Lecture 1 Outline
I. What is a Business?
II. Legal Forms of Business
III. Birth, Life, Death of a Business
IV. The Manager and Business as an Organization
V. Cooperate Organizational Structure

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 I. What is a Business?

 “Business” refers to efforts and activities related to making $$

 “A business” refers to any enterprise providing some products to
customers in exchange for profits
• Usually we think of “organized” businesses existing as registered entities
with ownership and management structures – a company or firm
• Product could be goods or service or a combination
Goods – tangible, can be stored
Service – intangible, created when used
• Customers can be end-consumers, or other businesses (consumer vs.
business market)
• There can be auxiliary goals besides profits

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 Business and Economic Activities

 An economic activity takes place when inputs are combined to produce a specific
good or service.
 In modern societies, economic activities are mainly conducted via organized
businesses
% of US GDP (Value Add):
Business ~82%
Government ~12%
Self-Employment ~6%

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 Role of Business in the Economy

 In the simple 2-sector

model of the economy:
• Households decide what
products to consume; they
also provide and allocate the
factors of production (land,
labor, capital)
• Businesses decide what
products to provide, what
resources to use, and make
and deliver the products to
the market

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 Primary, Secondary, and Tertiary Economic Activities

Economists classify economic activities into:

 Primary – Extraction of raw materials
agriculture, forestry, mining (3% US GDP)
 Secondary – Processing and conversion of raw materials into products
construction, utilities, and manufacturing (16% US GDP)
 Tertiary – trading, merchandizing, and services (81% US GDP)

Examples:
poultry farming – primary
slaughtering, packaging – secondary/processing
producing canned chicken soup – secondary/manufacturing
selling canned chicken soup - tertiary

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US GDP (Value Add) – Primary and Secondary
Line 2020 2021 2022 2020 2021 2022
1 All industries 21,322,951 23,594,031 25,744,108 100.0% 100.0% 100.0%
2 Private industries 18,612,228 20,784,824 22,807,496 87.3% 88.1% 88.6%
3 Agriculture, forestry, fishing, and hunting 160,778 225,670 270,820 0.8% 1.0% 1.1%
4 Farms 116,990 180,947 223,517 0.5% 0.8% 0.9%
5 Forestry, fishing, and related activities 43,789 44,723 47,304 0.2% 0.2% 0.2%
6 Mining 201,564 332,009 457,438 0.9% 1.4% 1.8%
7 Oil and gas extraction 103,176 221,950 324,524 0.5% 0.9% 1.3%
8 Mining, except oil and gas 57,070 67,371 78,287 0.3% 0.3% 0.3%
9 Support activities for mining 41,318 42,689 54,626 0.2% 0.2% 0.2%
10 Utilities 344,769 386,726 438,206 1.6% 1.6% 1.7%
11 Construction 951,822 1,014,317 1,090,107 4.5% 4.3% 4.2%
12 Manufacturing 2,148,124 2,366,452 2,649,697 10.1% 10.0% 10.3%
13 Durable goods 1,199,651 1,270,257 1,406,863 5.6% 5.4% 5.5%
14 Wood products 42,867 60,027 62,076 0.2% 0.3% 0.2%
15 Nonmetallic mineral products 63,676 67,739 73,065 0.3% 0.3% 0.3%
16 Primary metals 56,121 73,972 91,762 0.3% 0.3% 0.4%
17 Fabricated metal products 148,135 144,714 164,893 0.7% 0.6% 0.6%
18 Machinery 149,911 155,769 182,101 0.7% 0.7% 0.7%
19 Computer and electronic products 273,276 292,285 301,821 1.3% 1.2% 1.2%
20 Electrical equipment, appliances, and components 57,647 56,977 63,166 0.3% 0.2% 0.2%
21 Motor vehicles, bodies and trailers, and parts 142,734 138,733 156,406 0.7% 0.6% 0.6%
22 Other transportation equipment 143,924 151,750 172,989 0.7% 0.6% 0.7%
23 Furniture and related products 29,488 29,318 31,228 0.1% 0.1% 0.1%
24 Miscellaneous manufacturing 91,872 98,973 107,355 0.4% 0.4% 0.4%
25 Nondurable goods 948,474 1,096,194 1,242,834 4.4% 4.6% 4.8%
26 Food and beverage and tobacco products 289,582 306,032 311,858 1.4% 1.3% 1.2%
27 Textile mills and textile product mills 15,862 16,519 17,450 0.1% 0.1% 0.1%
28 Apparel and leather and allied products 9,495 10,025 10,380 0.0% 0.0% 0.0%

www.bea.gov
29 Paper products 64,926 64,602 69,158 0.3% 0.3% 0.3%
30 Printing and related support activities 36,435 38,820 42,259 0.2% 0.2% 0.2%
31 Petroleum and coal products 60,304 133,510 199,918 0.3% 0.6% 0.8%
32 Chemical products (include BioPharma) 391,662 447,548 501,387 1.8% 1.9% 1.9%
33 Plastics and rubber products 80,209 79,138 90,422 0.4% 0.3% 0.4%
Primary and Secondary Industry Total 3,807,057 4,325,174 4,906,268 17.9% 18.3% 19.1%
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US GDP (Value Add) – Tertiary
Line 2020 2021 2022 2020 2021 2022
1 All industries 21,322,951 23,594,031 25,744,108 100.0% 100.0% 100.0%
2 Private industries 18,612,228 20,784,824 22,807,496 87.3% 88.1% 88.6%
34 Wholesale trade 1,299,923 1,415,604 1,546,826 6.1% 6.0% 6.0%
35 Retail trade 1,335,601 1,534,920 1,621,033 6.3% 6.5% 6.3%
36 Transportation and warehousing 637,424 776,243 920,507 3.0% 3.3% 3.6%
45 Information 1,177,681 1,318,736 1,392,761 5.5% 5.6% 5.4%
46 Publishing industries, except internet (includes software) 302,356 340,394 358,213 1.4% 1.4% 1.4%
47 Motion picture and sound recording industries 75,756 89,090 100,377 0.4% 0.4% 0.4%
48 Broadcasting and telecommunications 485,009 497,271 512,497 2.3% 2.1% 2.0%
49 Data processing, internet publishing, and other information services 314,560 391,981 421,675 1.5% 1.7% 1.6%
50 Finance, insurance, real estate, rental, and leasing 4,606,508 4,972,407 5,329,881 21.6% 21.1% 20.7%
51 Finance and insurance 1,708,577 1,852,670 1,932,937 8.0% 7.9% 7.5%
52 Federal Reserve banks, credit intermediation, and related activities 768,086 835,722 856,745 3.6% 3.5% 3.3%
53 Securities, commodity contracts, and investments 310,086 348,880 360,583 1.5% 1.5% 1.4%
54 Insurance carriers and related activities 629,280 638,501 687,269 3.0% 2.7% 2.7%
55 Funds, trusts, and other financial vehicles 1,124 29,567 28,341 0.0% 0.1% 0.1%
56 Real estate and rental and leasing 2,897,932 3,119,736 3,396,944 13.6% 13.2% 13.2%
59 Professional and business services 2,725,751 3,030,557 3,314,348 12.8% 12.8% 12.9%
60 Professional, scientific, and technical services 1,671,820 1,856,761 2,013,355 7.8% 7.9% 7.8%
61 Legal services 287,783 318,286 328,934 1.3% 1.3% 1.3%
62 Computer systems design and related services 393,340 430,463 458,023 1.8% 1.8% 1.8%
63 Miscellaneous professional, scientific, and technical services 990,697 1,108,012 1,226,398 4.6% 4.7% 4.8%
64 Management of companies and enterprises 404,523 441,040 480,405 1.9% 1.9% 1.9%
65 Administrative and waste management services 649,408 732,756 820,588 3.0% 3.1% 3.2%
68 Educational services, health care, and social assistance 1,875,240 2,019,263 2,149,807 8.8% 8.6% 8.4%
69 Educational services 255,838 272,213 293,451 1.2% 1.2% 1.1%
70 Health care and social assistance 1,619,402 1,747,050 1,856,356 7.6% 7.4% 7.2%
74 Arts, entertainment, recreation, accommodation, and food services 694,190 904,153 1,081,631 3.3% 3.8% 4.2%
75 Arts, entertainment, sports, and recreation 170,378 215,650 271,225 0.8% 0.9% 1.1%
78 Accommodation and food services 523,812 688,503 810,407 2.5% 2.9% 3.1%
79 Accommodation 127,096 174,866 215,831 0.6% 0.7% 0.8%
80 Food services and drinking places 396,715 513,637 594,576 1.9% 2.2% 2.3%
81 Other services, except government 452,850 487,768 544,433 2.1% 2.1% 2.1%
Tertiary (Private) Total 14,805,168 16,459,651 17,901,227 69.4% 69.8% 69.5%
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Manufacturers, Merchandizers, and Service Providers

 From operation perspective, businesses are categorized into three

major types :
• Manufacturers: turn raw materials and components into goods
• Merchandizers: retailer and distributor of goods
• Service Providers: all tertiary activities: transportation, financial services, legal
and business services, health, education, communication, entertainment,
travel; also, utilities, construction

 Differ in management focus and operation logics

 Many businesses involve both goods and services

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II. Legal Forms of Business
 A company can be in one of many different legal forms.
 Different legal forms offer different ownership structures, liability assignments, and taxation
rules. Governments create different legal forms to facilitate business formation and operation
while ensuring accountability.
 Details of different forms and their regulations vary across jurisdictions and evolve over time.
However, there are three major basic forms plus many hybrids (LLP, LLC, etc.)
1. Sole proprietorship
2. Partnership
3. Corporation
 Sole proprietorships and partnerships do not have a separate legal personality apart from
their owners. A corporation or company means a separate legal entity with its own rights
and obligations.

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1. Sole Proprietorship
 One single owner. May be limited to natural person. May require
citizenship/residency.
 Not registered as a company and no legal identity separate from the owner.
May need licenses and permits for specific business.
 Can register a business name. Permissible to use the word “company” or
“co” in the name.
 Cannot enter into contracts or own properties. It is the owner who enters
into contracts.
 Owner makes all decisions, takes all profit, but has unlimited personally
liability – may have to pay from personal wealth for damages arising from
the business
 Profits taxed as owner’s individual income (pass-through taxation)
 Usually not required to report financial statements
 Does not survive the owner
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2. Partnership

 When multiple partners get together to do business under a Partnership

Agreement outlining individual partners’ rights, responsibilities, capital
contribution and profit/loss distribution ratio, etc.
 Partners can be non-natural persons; i.e., other companies
 All profits/loss must be distributed 利潤分配 to partners in the same tax
year. Partners are taxed individually on the distribution (pass-through
taxation). Partnership files income report but does not pay tax
 There are three main types:
i. General Partnership
ii. Limited Partnership
iii. Limited Liability Partnership

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i. General Partnership (GP)

 Partners personally jointly and severally liable. Partners jointly

enter into contracts and jointly own any property.
 Partners must fulfil fiduciary duties, good faith, fair dealing, loyalty,
disclosure, care, etc.
 May or may not survive dissociation (e.g. death) of one partner
depending on jurisdiction and existence of pre-agreement.
 Law firms, accounting firms, medical clinics were originally
commonly organized as general partnerships until LLP (later)
became more popular.

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ii. Limited Partnership (LP)

 Consists of general partners and limited partners

 General partners have management control and have unlimited
liability.
 Limited partners only invest money. They have no personal liability
beyond losing the capital they have invested.
 Survives the limited partners.
 Venture capitals and other investment funds are often structured
as LPs.

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iii. Limited Liability Partnership (LLP)

 Relatively new (adopted in HK in 2016), championed by the legal

profession. A pass-through entity like all forms of partnerships.
 Partners not personally liable for acts of another partner beyond
losing what they have invested in the partnership.
 Details vary across jurisdictions. May have various disclosure
(clients must know you are an LLP), notification (clients be
informed who is the partner-in-charge for the matter), insurance,
reporting requirements.

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 3. Corporation
 A company incorporated (Inc) as a “legal person” which has it own rights and obligations.
Can own properties and can sue or be sued. Called limited company in Hong Kong (Ltd)
and company limited by shares in China (股份有限公司)
 Subject to many regulations and needs to pay tax on its profits.
 Owners are shareholders who pay capital to acquire shares in the company. Ownership
can be easily transferred by transfer of shares. When has profits, company may give
some $$ back to shareholders in – per share dividends
 Shareholders have no personal liability. Shareholders can be non-natural persons and
usually there are no citizenship/residency requirements.
 Must have a board of directors elected by shareholders to oversee their interests
 Double tax in most countries because shareholders are taxed again on dividends
received (Dividends not taxed in Hong Kong).
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 Public Corporation
 A public corporation is one whose shares are traded in the public stock exchange. They
are subjected to even more regulations and transparency requirements
 Most well-know large companies are corporations because:
- They are attractive to investors who can enter/exit ownership easily
- Clear structure with separation of ownership/investors, management, and supervision
provides accountability and business continuity independent of management and board
- Stronger recognition by customers, investors, business partners, and employees
- Easier to raise fund by issuing new shares or bonds, or by borrowing from banks
 A corporation becomes public by selling shares to the public for the first time on a
stock exchange. That is called an IPO (Initial Public Offering)

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 Limited Liability Company LLC
 However, the most common form of business in the US is the Limited Liability Company
(LLC). They combine the characteristics of a corporation and a partnership – limited
liability with pass-through taxation. LLCs are also common in Hong Kong and China.
 In the US, an LLC has no share, and owners are called members who may have different
percentage ownerships. In China, the owners are still called shareholders, but the LLC is
called 有限公司 instead of 股份有限公司.
 An operating agreement specifies the business purpose, members and percentage
ownerships, financial and management arrangement. Profit allocation can be in
proportion to percentage ownership but not necessarily. A board is not a must.
 Different jurisdictions have different rules. There may be limit on number of owners,
and some companies such as banks or insurance companies may not be allowed to be
owners of LLCs.

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 Other Business Forms
In addition, there are many other legal forms for businesses:
 Company limited by guarantee
 Subsidiary
 Representative Office
 Branch
 S-Corp (US)

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III. Birth, Life, Death of A Business
 Business starts with a business idea and entrepreneurial spirit
 Need $$ (capital) to start business. Capital: money used to build, run or grow a
business
Business
idea

Investing in IP,
Plants and
Equipment Operating Profit

Capital/financing
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Equity and Debt Capital
 Business can raise capital from shareholders or lenders
 Shareholders provide funding to acquire shares, or equity, in the business. Business
pays dividend to shareholders when it makes profits. In general, shareholders share
profits according to the number of shares they hold. But there can be different
classes of shares and special allocations of profits (e.g. LLC).
 Lenders lend money to company and earn a “guaranteed” interest. Lenders can be
banks who loan money, or institutions and people who purchased bonds issued by
the company. A bond is an obligation of future payments to the lender.
 Lenders are creditors. Other creditors include suppliers and employees. Company
must fulfill claims by creditors before paying dividends to shareholders.
 Creditors can be secured (specific assets are reserved for fulfilling the claim if
necessary) or unsecured. There can be priority in claims.
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Raising Share Capital - Example

 Company X has 100,000 shares authorized. Shareholders A & B each

owns 2,000 shares. Total of 4,000 outstanding shares. Company
issues 5,000 shares to sell to C for $1M, at $200 per share.
 Pre-money valuation of Company X is $0.8M. Post-money valuation is
$1.8M.
 Company X has profit of $160,000 this year. It declares a dividend of
$7 per share. Shareholders A, B, C receive dividends of $14,000,
$14,000, and $35,000 respectively. Company X retains $97,000 of
profit to further expand the business.

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What is success for a Business?

 What should be the measures of success for a company? Are

the measures different for private companies and for public
companies?

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The 5 Stake Holders of a Firm

Business is also about meeting the diverse expectations of

the stakeholders:
 Customers (Product quality, service)
 Shareholders (ROI, EPS)
 Employees (Workplace, compensation, stability)
 Suppliers (Market position, financial stability,
collaboration efficiency, payment)
 Community (Corporate citizenship, brand
image, ethics, tax contribution, environment)

Who matters the most?

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How can a Business be successful?

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What if a Business is not Successful?

 Should we expect all businesses to be successful?

 What should happen to a person who is not so successful?
 What should happen to a business that is not so successful?

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End-Of-Life of Business

 A company can be ended by

• Dissolution = liquidation = winding-up: all creditors are to be paid, and
remaining assets to be divided among the owners/shareholders
• Acquisition by another
• Merger with another: need to define who is the surviving firm
 Bankruptcy occurs when company becomes unable to fulfil claims of
creditors. Bankruptcy is to place company under supervision of a court
so that claims of creditors can be fulfilled orderly and fairly.
 A bankrupted company may be liquidated, acquired, or may re-emerge
from bankruptcy.

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IV. The Manager and Business as an Organization
 Some of you take this course because you want to become a manager. A
manager is a person with authority and accountability in an organization
to ensure the organization's success.
 An “organized” business is an organization.
 An organization is a community of people functioning together to reach
some common goals. Working together enables specialization and
economy of scale.
 Often there are functional sub-organizations, teams, and informal groups
 Success of the business depends on the effectiveness of the organization
Effectiveness: the ability of an organization to reach its goals.

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Authority, Responsibility, and Accountability
Within an organization, individuals are given different authority,
responsibility, and accountability:
 Authority – the formal and position-based power to make decisions and
command others to act
 Responsibility – the duty to perform specific roles. It is task-focused and
can be shared
 Accountability – the duty to give account of events and results. It defines
the ownership of results and should be assigned to one individual only

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 Business Organization as an Open System

 Modern theories view each

organization as an open systems that
exists within an external environment.
It transforms inputs to various
outputs.
 An organization is made up of various
parts (subsystems; various teams)
and adapts the interworking of these
parts in order to become successful in
the environment.

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 The Four Functional Areas within a Business

 Subsystems within a business are in four $$

groups of functions:
Finance
• Finance: acquiring the needed financial Revenue
resources for the business Inputs
• Marketing: identifying needs and define Support
product offerings to create value for Inbound Logistics

customers and company Marketing

Operations Info
• Operations: transforming inputs into products
• Support: providing the administrative Outbound Logistics
Products
infrastructure, accounting, IT, legal, HR, etc.
Operations + Inbound & Outbound Logistic
that enables the other activities = OSCM (Operations and Supply Chain Management)

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 Activities Inside a Business
 Back in 1985, when finance was not as prominent a part of business, the
management guru Michael Porter described business as a value creation process
through a set of primary and support activities. A business must be able to
conduct these activities better than its competitors.
Support Activities

Firm Infrastructure
HR The Competitive Advantage,
Michael Porter, 1985
Technology Development
Procurement

Marketing Services
Inbound Operations Outbound & Sales
Logistics Logistics

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 Primary Activities
 Inbound Logistics – Getting the inputs ready for production: receiving,
storing, inventory control, transportation scheduling
 Operation – Transforming inputs to products
 Outbound Logistics – Getting outputs to the customers: warehousing, order
fulfillment, distribution
 Marketing and Sales – Identifying needs and values, getting customers to buy
your products, creating values for customers and company
 Services – Supporting the product’s value: installation, customer support,
training, repair, spare parts, upgrading, etc.
In management, these are called the line functions. They generate income.

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Support Activities

 Procurement – Purchase of machines, raw materials, buildings, services, etc.,

and must maintain relationships with suppliers.
 Human Resource – Recruiting, retention and compensation, performance
management, education and career development in support of company goals
 Technology Development – Research and development, products and
processes design
 Infrastructure – General management, finance, legal, accounting, public affair,
IT, quality assurance, ESG (Environmental, Social & Governance)

In management, these are called the staff functions. All staff organizations
are “cost centers” – they incur costs but do not generate income.

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 Understanding Organizations at Three Levels

To understand what makes an organization effective, a manager needs to

understand organizations at three levels:
 Individual – How people behave in organizations? What motivates
individuals? How people perceive themselves and others? How to design
and assign works?
 Team – The dynamic of people working in a team
 Structure – What should be the composition of the teams and how
should the teams be connected together?

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The MARS Model for Individual Behavior and Results

Study OB (organizational behavior)

or psychology to better understand
yourself and others
Fall 2024 A.K. Wong 37
 MARS
M: Motivation A: Ability
 Direction – focus and alignment  Aptitude
 Intensity  Learned Capabilities
 Persistence  Competence
Can be intrinsic or extrinsic  Person-job fit
R: Role Perception
S: Situation Factors
 Understand tasks to be performed
 Environmental conditions
 Understand priorities and quality
expectation beyond the individual’s control
 Understand preferred method and
in the short run
behavior
https://relivingmbadays.wordpress.com/2012/09/09/mars-model-of-individual-behavior-and-performance/

Fall 2024 A.K. Wong 38

 Team
 A team is a group of people who perceive themselves as a social entity within
an organization interdependent with and mutually accountable to one another
for achieving some immediate goals
 There are three main characteristics of a team:
- Permanence
- Skill diversity
- Authority dispersion: Is authority distributed across members or concentrated in a
formal manager?
For example, an accounting department is likely to have high team permanence, low
skill diversity, and low authority dispersion. A task-force may have low team
permanence, high skill diversity, and high authority dispersion.

 Besides, there can also be informal groups and coalitions that can have
strong impacts on an organization
Fall 2024 A.K. Wong 39
 Team Effective Model
 Do people always work more effectively in team than as an individual?
 Process losses are the efforts required to develop and maintain a team.
Social loafing is when people exert less effort and perform at a lower
level when in a team.

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The Manager
 The manager is the one with authority
in a team and is accountable for this
authority. Becoming a manager is the
first step towards senior management.
 Management is made up of three
functions:
• Planning (Strategic -> Tactical -> Operational)
• Directing (organizing + leading)
• Controlling
 According to Henry Mintzberg, a
manager has 10 managerial roles.

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What does it take to be a Successful Engineering Manager/Leader?

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V. Corporate Organizational Structure
 C-suite officers (CEO, CFO, COO, CMO) are the highest-level managers of a company.
CSO (sustainability), CQO (quality), CRO (risk) on the rise.
 Various line and staff divisions are themselves organizations, with managers
reporting to the C-suite officers
Board of
Directors C-Suite Officers
(CEO, CFO, COO, CMO)
Procurement Public Relations Human Resources

Staff R&D
Safety &
Legal Accounting
Environment
Business/Product
Management Service

Line Engineering Production Marketing Distribution Customers

Fall 2024 A.K. Wong 43
Organization Structures
 Organizations and teams can be formed according to one of the following choices:
(1) Functional, (2) Discipline, (3) Product/Regional, (4) Project, (5) Matrix, (6)
Network
(2) A Discipline-based R&D Group
(1) A Functional Engineering Team
R&D

Technical Director
Network Multimedia Software
Systems Technology Systems

Mechanical Design Electrical Design Quality Control Artificial

Architecture VoIP Intelligence
& Protocols

Traffic & Video Security

System Engineering Production Engineering Performance
Wireless Speech Data
Systems Processing Management

Fall 2024 A.K. Wong 44

 (3) Product/Regional Organization
 By products or by regions/customers. Appropriate when products or regions are
segmentable.
Technical Director
President

Governmental Products University Products Custom Products North America Europe Asia

Consumer Products Industrial Products Latin America Africa

Pros
Cons
 Market-focused decision making
 Focus on P/L and growth  High costs due to autonomy or
duplicated facilities
 Encourages management
development  Reduced specialization
 Provides for decentralization  Takes time to affect changes
Fall 2024 A.K. Wong 45
(4) Team/Project Organization

 Set up for specific task for limited Functional Control

duration. Generally not permanent. Team Leader

 Team members “on loan” from

functional organizations
Member A
 Team Leader in full control
 Examples: Product team, special task
Member B
force

Member C

Member D

Engineering Production Logistics Design

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 (5) Matrix Organization
 Began in the 1960s to combine output focus with input/competency focus
 Project managers with $$ under control and right to buy services elsewhere. Can
be made weak or strong.
 Functional managers with $$ to develop people
 Can have additional matrix dimensions: product/country, business division (e.g.
new acquisition) Functional Control

Project A

Project-based Project B
Control
Project C

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 (6) Network Organization
 A newer organizational structures in which independent, flexible,
empowered, and responsible members form alliance and self-organize and
to innovate and to reach given goals.
 May work within but many work across companies (e.g., global
business/supply chain alliance/partnerships).
 Diversified alliance membership: allegiance, culture, value, geographic,
business practice, motivation, information sharing, etc.
 A Virtual Network Structure (VNS) is a network organization in which most
of the key functions are subcontracted to other businesses.

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Organizational Structure Cases

From Panmore Institute:

 Amazon – Functional Amazon; Amazon Annual Report 2023
 Apple – Product-based hierarchical Apple
 Nike – Geographic divisional with networked new product development;
owns no manufacturing and outsources everything except for marketing
and design Nike Analysis; Nike Annual Report 2024
 Starbucks - Matrix. Starbucks

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Nike – Started with a Thought

The Rise of Nike: How One Man Built a Billion-Dollar Brand

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